1. Return on Investment Nelson Soler MBA/MS/EDFP/ASFP Understanding our Nonprofit Framework Importance of ROI Calculating ROI Framing the ROI Message 1 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

2. Module 1 Introduction  About the Instructor  The Framework  Small Group Exercises Nelson Soler©2010 for UWM School of Continuing Education

3. About the Instructor, Nelson Soler MS Int. Business MBA – Finance BA – Economics BS – Electrical Engineering  Nonprofit Certificate  Real Estate Broker  Economic Development Finance Professional ¼ of career in Corporate  Banking  International Mining  Utility ¼ Nonprofit Sector ¼ Government  County  University System ¼Entrepreneur Nelson Soler©2010 for UWM School of Continuing Education

4. Exercise Break in groups of three and try to answer these questions: What makes your organization unique? What are your organization three biggest outcomes? How your organization impacts your stakeholders? Nelson Soler©2010 for UWM School of Continuing Education

5. About the Subject Can be technical and application specific Difficult to cover in one interaction  Continued discovery and exploration is needed  Requires a culture shift Fairly new to the Nonprofit sector – about 7 years old  Embraced in Europe and Canada  Key organization in the US Nelson Soler©2010 for UWM School of Continuing Education

6. Module 1: Framework-Nonprofit Reality Too Many Increased Regulation Higher Competition Funding  The Nimble Nonprofit Shift on Focus (More like a business)  Demand for Accountability and Transparency  Imperative of Sustainability 6 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

7. Too many

8. Demand for funds continues to increase Funding is shrinking

9. Good intentions are no longer enough 63% of donors want to know how their donation was used

11. Transparency

12. Donor Base Expectations Shift Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 12 72%

13. Module 2 Importance of ROI as a tool Nelson Soler©2010 for UWM School of Continuing Education

14. Have you heard these phrases? Do more with less? Why is your overhead and/or indirect cost too high? What value will I get for making this donation? Or How will the money be used? Why should I donate to you versus another organization that do the same? Have you quantified social impact? What are your measurements? Or what is your evaluation plan? 14 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

15. All these questions are directly or indirectly referring to your Return on Investment! 15 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

16. Exploring the Business Definition Return on investment (ROI) is the benefit to the investor resulting from an investment of some resource Measure of profitability Measure of efficiency

17. Calculation For profit world is very simple Benefit from Investment over the cost ROI = (Gains – Cost)/Cost ROI = (Impact – Cost)/Cost ***Social Impact

18. Importance of ROI for Nonprofit Programs Key to Evaluation and Measurement Needed for  Sustained funding (public sector and some foundations)  Social impact quantification  New funding (private individuals, corporations) Important for Organizational Branding and Communication  Compelling Messaging  Takes the subjectivity out of our work 18 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

19. Challenges for ROI measurement in the Nonprofit Sector Nonprofit traditional culture Capturing true costs Actual Calculation What other challenges you feel can potentially arise? 19 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

20. Other Challenges Nelson Soler©2010 for UWM School of Continuing Education

21. Nonprofit world Benefits tangibles and intangibles Outputs Social Impact Costs Labor  Volunteer Labor Materials Overhead  Costs you incur weather or not you run the program Other Costs  Cost of using your own money (cost of capital)

22. Measuring Social Impact source: socialvalueuk.org

23. Calculating ROI Resources http://nonprofit.about.com/od/foundationfundi nggrants/ss/Using-Sroi-To-Show-Your- Nonprofits-Impact.htm http://nonprofit.about.com/od/foundationfundi nggrants/ss/Using-Sroi-To-Show-Your- Nonprofits-Impact.htm 23 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

24. Module 3 Linking ROI to Evaluation and Program Measurement Nelson Soler©2010 for UWM School of Continuing Education

25. M3: ROI and Evaluation Lets visit our evaluation models Linear Open Model 25 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

26. Open System Model Nagajaran and Vanheukelen 1997 Needs Objectives InputsActivitiesOutput Actual Outcomes Program

27. Open System Model Nagajaran and Vanheukelen 1997 Needs Objectives InputsActivitiesOutput Actual Outcomes Program Technical Efficiency (aka Productivity) Adequacy Relevancy Effectiveness Cost Effectiveness Cost Benefit Program Effectiveness

28. Check point What value you notice in applying the different models? Where does ROI fit? Nelson Soler©2010 for UWM School of Continuing Education

29. Where does ROI fit? Outputs Quantitative Qualitative Outcomes Economic Impact Social Impact ROI Nelson Soler©2010 for UWM School of Continuing Education

30. Where does ROI fits? You may be already calculating it but you are unaware you are Concepts  Social Impact  Effectiveness and Efficiency  Cost-Impact Analysis 30 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

31. Nelson Soler©2010 for UWM School of Continuing Education

32. Examples of Outcome: Entrepreneurial Training Program Need: Wealth Accumulation Model: Education + Entrepreneurship leads to economic empowerment Goal: Recruit 30 low income aspiring entrepreneurs  Assessment – Financial and Business  Training – 8 months  Coaching  Provided seed funding Nelson Soler©2010 for UWM School of Continuing Education

33. Example: Ent. Training Outputs Interviewed and assessed 86 of 290 applicants Selected 30 28 individuals finished all components Provided 1200 hours of one on one coaching Provided $96,000 for start up funding Outcomes Identified the needs of low income entrepreneurs in inner city 11 entrepreneurs established new enterprises creating 26 jobs 15 entrepreneurs grew their enterprise creating 38 jobs Agency capacity was increased Nelson Soler©2010 for UWM School of Continuing Education

34. Translate to Value Job Creation  Agency 1 FT job + 2 part-time jobs became FT Direct Impact: 45K +32K +28K = $105K Indirect Impact: 105 *1.25 Local Factor =131.5 K  Entrepreneurs New  Total Impact 297K Established  Total Impact906K  96 K of dollars were additionally infused in the economy Nelson Soler©2010 for UWM School of Continuing Education

35. ROI Dollars Infused in the Economy  (Benefit –Cost)/$437.5  $1535.5- $437.5/$437.5 = 2.5 times or 250%  For each dollar infused, we created 2.5 of local economic spending Tax Base Increased  Our local tax base was increased by 15% Nelson Soler©2010 for UWM School of Continuing Education

36. Other Job Related Job Retention or Underemployment  2 unemployed now employed and were able to use the project experience to find a job Two subcontractors were employed and their capacity was increased  35K & 40K Three participants realized the world of entrepreneurship was not for them. This save the economy XXX dollars Nelson Soler©2010 for UWM School of Continuing Education

37. Exercise Output Educate 100 families to deal with the stigma of disabilities Outcomes ? Nelson Soler©2010 for UWM School of Continuing Education

38. Social Impact Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 38 Benefits JOBS Created Employer attitudes towards disabilities changed Tax Base Increased Statue, Ordinance Change Incentive for Employer to hire individuals with disabilities

39. Effectiveness and Efficiency the degree to which something is successful in producing a desired result; success the ability to accomplish an output with the least resources Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 39

40. Cost-Benefit Analysis Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 40

41. Check Point Have you applied any of these concepts? How? Do you feel you can apply these concepts? Nelson Soler©2010 for UWM School of Continuing Education

42. Module 3- ROI and Sustainability Fundraising and Sustained Funding Trends Need for articulating social impact Transparency Accountability SUSTAINABILITY 42 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

43. Understanding your “Donors” Traditional Feel Good Tax Saver Impact Seeker Entrepreneur 43 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 StakeholdersInvestors

44. Motivation Pyramid Kay Sprinkel, Beyond Fundraising ConnectedConcernedCapacity

45. ROI Message Articulation of value 1. Determine the motivation of your stakeholders 2. Develop programs with measurable outcomes 3. Translate outcomes into benefits 4. Demonstrate effectiveness using investment terms 5. Communicate results regularly Adapted from Tom Ralser, ROI for Nonproftis, 2007

46. Outcomes to benefits Societal costs avoided Value of jobs created Value of increased skills in the job pool Value of adequate parental care Value of increased productivity Nelson Soler©2010 for UWM School of Continuing Education

47. Some ROI Terms Social Impact per Dollar Invested Local Economic Impact Return per Dollar Spent Cost Savings to Society Nelson Soler©2010 for UWM School of Continuing Education

48. Exercise Think of two to three outcomes and restate them as benefits Nelson Soler©2010 for UWM School of Continuing Education

49. Examples http://nghp.org/vision.html University of Minnesota Extension http://www.extension.umn.edu/youth/research/y outh-programs/docs/economic-return- afterschool-programs.pdf Nonprofit Roundtable of Washington http://www.nonprofitroundtable.org/storage/doc uments/beyondcharity.pdf Nelson Soler©2013 for UWM School of Continuing Education

50. Module 4 Framing the ROI Message Nelson Soler©2010 for UWM School of Continuing Education

51. Branding and Communications Framing the ROI Message Unique Proposition to our Communities Stakeholder sustained engagement New Stakeholders involvement Employee Empowerment 51 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015

52. Messaging Clients Stakeholders/Investors/Funders  Public v. Private  Politicians and Policy Makers Regulators Community at Large – Citizenship of your Organization Nelson Soler©2010 for UWM School of Continuing Education

53. Exercise Crafting a 60 second message Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 53

54. Message delivery Traditional  Reports  Presentations  White Paper Non-Traditional  Social Media  E-brochures Nelson Soler©2010 for UWM School of Continuing Education

55. Resources Some non academic sources to generate discussion: http://www.volunteerhub.com/blog/return-on-investment-for-nonprofits/ http://philanthropynewsdigest.org/off-the-shelf/roi-for-nonprofits Example of federal agency requirement: http://www.fgdc.gov/grants/ReportFormats/ROIReports Academic: http://mdi.missouristate.edu/assets/mdi/Training_ROI_Non_Profit_Sect or_dissertation.pdf http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1021&contex t=gradconf_hospitality Book: ROI for Nonprofits: The New Key to Sustainability By Tom Ralser, 2007 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 55

56. Resources http://www.neweconomics.org/issues/entry/so cial-return-on-investment http://www.neweconomics.org/issues/entry/so cial-return-on-investment Nelson Soler©2010 for UWM School of Continuing Education

57. Questions soler@multiculturalinstitute.com 414-383-4633 Multicultural Entrepreneurial Institute Inc., Nelson Soler (c) 2015 57